The ratings on French protection institution AG2R Prevoyance (AG2RP), the main
entity of the AG2R group (AG2R), reflect Standard & Poor's Ratings Services'
view of its strong competitive position and good capitalization. Partly
offsetting these factors are subdued, albeit good, operating performance
prospects. Lower earnings will also dampen financial flexibility, which we
view as good, however. The ratings on subsidiary PRIMA reflect its core status
within AG2R.

We view AG2R's competitive position as strong. AG2R has sound positioning
nationwide and in various economic sectors as a leading group protection and
health insurer. Together, AG2R and La Mondiale form one of the leading life,
accident, and health insurance groups in France.

In addition, AG2R's successful integration of other protection institutions
has helped it increase sector and geographic spread. This long-standing
presence in the French group-protection business has bolstered AG2R's
expertise in its chosen market, in our view, and helped it reach the No. 2
position in France. However, we believe that AG2R's concentration in France
and a high level of reinsurance partly offset its strong competitive position.
We forecast AG2Rs gross premium written (GPW) to increase in 2012 and 2013 by
a mid-single digit, mainly owing to growth in health business.

We view risk-adjusted capital adequacy as good. Despite a significant
proportion of soft forms of capital, like the present value of future profits,
we consider that AG2R's level of capital compares well with that of peers in
the French market. A conservative quota-share reinsurance program relieves
AG2R from a substantial portion of its capital requirements. We also view
reserving as prudent.

We consider that increased claims on health and disability business and high
costs related to the change in legal retirement age in France are hampering
AG2R's efforts to improve its underwriting performance. Higher claims have
prevented AG2R from meeting its underwriting earnings targets and will likely
remain constraints on operating performance over the next two years. However,
we expect AG2R to benefit from what we view as a strong and well-entrenched
competitive position in its niches, allowing it to gradually improve its
operating performance over the next two years. Consequently, our base-case
scenario factors in our forecast that AG2R will post a non-life combined (loss
and expense) ratio in the 112%-115% range in 2012, improving to less than 112%
in 2013. AG2R's non-life business comprises health, accident, accidental
death, disability, and worker's compensation insurance. We also expect the
group's term-life business to boast a combined ratio of less than 70% over the
same period. The expense ratio should continue to average 20%. These figures
should translate into operating earnings of EUR25 million to EUR40 million yearly,
all other factors remaining equal.

Increasing risks related to the investment portfolio are also weighing on
AG2R's financial profile. We still consider the average credit quality of
AG2R's investment portfolio strong, but at the lower end of the range
according to our criteria. Credit risk increased during 2011 and 2012,
dampening the quality of AG2R's investments. The proportion of equities in the
portfolio remains below the French market average, but still adds to earnings
volatility.

A more subdued earnings outlook also constrains the company's financial
flexibility, which in our view is the main cause of AG2R's funding future
needs.

Outlook

The stable outlook reflects our anticipation that AG2R's strong competitive
position should help gradually improve its underwriting performance. It also
factors in our belief that good capital adequacy will likely support the
group's overall credit profile over the next one to two years.

We could lower the ratings if, over that period, AG2R's operating performance
did not meet our underlying base-case assumptions. We could also lower the
rating if capital adequacy weakened as a result of deteriorating investments,
exceptional losses, or unfunded growth, or if AG2R's business profile were to
weaken.

We could raise the ratings if the group's operating performance materially and
sustainably exceeded our base-case forecasts, with equally prudent reserving,
and if capital adequacy improved to levels more supportive of the ratings.